Sri Lanka Crisis: Bilateral Trade With India So Far And Its Aftermath

22 July 2022

It’s been three months since the Sri Lanka crisis, since April 2022, the small island nation in Southeast Asia is struggling to manage the foreign reserves and its domestic supplies. It safeguarded the economy through a credit line, loans, and bilateral trade with countries. The neighboring countries India and China helped Sri Lanka in its crisis – China allotted support loans to Sri Lanka, and India sent outbound shipments of essential commodities by providing loans. However, due to different issues, shipments from India are halted now.

Sri Lanka Top Imports and Exports

It is crucial to look at the figures for imports and exports Sri Lanka accounts for in international trade, to fully understand its state, as per the stats of 2021. The total amount of imports in Sri Lanka for the year 2021 amounted to $17.95 billion.

The top imports of Sri Lanka for 2021, as seen in the table below, feature telephones & mobile phones at the top ($697.4 million). Other top imports of Sri Lanka include knitted or crocheted fabrics and pharmaceuticals.

As per the table below, the top exports of Sri Lanka in 2021 features tea with $1.5 billion export value at the top position. Sri Lanka's top-grossing export commodities mainly consist of apparel & accessories, especially knitted or crocheted apparel & accessories, as seen in the table below. The total amount of exports from Sri Lanka in 2021 amounted to $15.33 billion.

India Exports To Sri Lanka—2021 and 2022

India is the second-biggest importing partner for Sri Lanka after China at the top, as per Sri Lanka’s imports 2021. In 2021, India exported worth $4.24 billion worth of commodities to Sri Lanka. The table below shows the top exported commodities India accounted for in 2021, sending outbound shipments to Sri Lanka.

Sugar in solid form is the highest exported commodity from India to Sri Lanka with a value of $277.2 million, followed by medicines with an export value of $261.5 million and knitted or crocheted fabrics with a combined value of $343.43 million. The top exports from India to Sri Lanka consist mainly of commodities from the textile sector, such as apparel and fabrics.

The table below shows the quarterly exports of India to Sri Lanka, following the year 2021 to 2022. The first quarter of 2021 amounted to $1.09 billion, followed by the second quarter with $1.04 billion and the third quarter with $858.7 million. The value of exports declined in the year 2022 by a decrease of $945.19 million in the second quarter (for a period of two months only).

India Exports To Sri Lanka Amid Crisis

India has sent several outbound shipments to the island nation of Sri Lanka on an urgent basis. Along with the outbound shipments containing essential commodities required by Sri Lanka, India’s RBI allowed a credit line of about $1 billion. A diesel consignment as a $500 million credit facility, imports of fuel and medicines, a credit facility for 40 thousand tons of rice, and more.

Among the exported commodities from India to Sri Lanka amidst the crisis, the payments for the made exports by Indian exporters were never received. Consignments for onions and sugar specifically are halted by the exporters due to the backlog of the payments from Sri Lanka. Below are the monthly exports of onions from India to Sri Lanka for 2022 (Jan-May).

Another commodity for which India has stopped sending consignments to Sri Lanka is sugar. The reason for this is the same as earlier mentioned – stuck payments. So far, from January to May, Sri Lanka imported $29.9 million worth of onions and $67.9 million worth of sugar. The table below shows the monthly exports of raw sugar from India to Sri Lanka in 2022 (Jan-May).

As it is evident from the tables shown above, the exports of both onion and sugar have declined in the month of May, a month after the beginning of 2022’s crisis. The consignments from India to Sri Lanka are now at a halt state due to the non-payment of the made exports, however, it seems the Indian government is making new efforts for its neighbor country.

Recently, India has exported about 1.8 million tons of wheat to Sri Lanka despite the ban on wheat exports overseas. One of three outbound shipments from India for consignments of fuel has been shipped to Sri Lanka. While India has assured the support, the island nation is implementing a National Fuel Pass to monitor fuel consumption in order to prevent a fuel crisis.